Most of us are raised to consider money and commodities as single, fixed, finite things. You give the cashier your money, and you get the chocolate bar. That’s it, right? But what about passive income streams?
There’s much more to the picture! This is great for ambitious entrepreneur types like you and I. We can make a “chocolate bar” that can’t be used up, no matter how many people buy it. That’s right – one chocolate bar, limitless earning potential.
As you’ve figured out by now, the concept I’m referring to is known as “passive income.” When someone creates something, invests in something or monetizes something that generates continuous income, they’re said to have a “passive income stream.”
Why passive? Well, the idea here is to create a revenue-generating system that works in the background. Ideally, the best passive income streams require no active participation to maintain, hence the term.
This brings me to my two disclaimers:
First, even the most hands-off passive income streams are almost never completely so. You can get really, really close in some of the options mentioned below, but there’s an initial time and/or money investment at the very least.
Secondly, I have to be upfront about my obvious bias. As a true-blue affiliate, I will always uphold this gem of a marketing model as the best way to generate limitless revenue.
Alright, enough of the preamble. To make it more absorbable, I’ve lumped my favorite passive income strategies into three categories. I have also included stellar resources throughout this list to help provide you with more information if you so desire.
Ready to break down 13 of the best passive income ideas 2020 has to offer? Let’s get to the worker, let’s not get to work!
Long, long before the age of the sales funnel (and even the Internet), people generated passive income with intellectual property. Ever heard of Edgar Allen Poe? Hemingway? These dead pen-pushers were Ballin before Ballin was Ballin. They created one literary work (at a time) and profited steadily.
Of course, you don’t have to inspire millions with award-winning prose to stand out in today’s world. You just need to create something that solves a problem. Create something that improves someone else’s life, find a place to put it, and let the customers come to you. Here’s what I mean:
Stock Photos and Music
Okay sure, maybe huge companies like Nestle or Starbucks have some musical savant named Carl who makes jingles with his synthesizer all day, but the rest of us don’t. Do you know those video ads that everyone’s so hyped about? If you don’t want them to be weird, you’ll need at least some soft music.
That being said, if you’re the one with the musical talent, then you can create catchy and original tracks and sell them to stock sites. This is one of the best passive income streams for creatives. Online aggregators will host your content, get downloads and pay you! The same goes for your photography.
Online Courses and Training
Alright, so this is part two of my bias, of course (being an affiliate and a trainer, after all). Online courses and training is such a great way to make passive income. Whatever you’re an expert in, share it with the world. Create a series of actionable video lessons, guides and so forth to sell.
You can host courses on your own site (definitely not so passive) or let Udemy do it for you. If you can generate enough interest before launch – talking it up on social media and your blog won’t hurt – then you can roll into some serious profits sooner rather than later.
I know, I know – cue the eye roll. Look, just because they’re everywhere, doesn’t mean they don’t work. In fact, it’s quite the opposite. If you can wrangle together even a 9- or 10-thousand-word ebook on a topic relevant to your niche, you can generate passive income.
It’s one of the best passive income ideas 2020 has to offer, and it isn’t going to die anytime soon.
People are reading these things to absorb actionable info in small bites, so give it to them. Be concise and realistic, only diving into the theory when necessary. If your book is about reducing debt, for example, you probably shouldn’t enter into a dissertation on the Federal Reserve’s policies.
Normally, I would file this kind of thing under “training and courses,” but the health and fitness niche is so ridiculously successful that I had to keep it separate. Whether or not you hop on a trend (keto, interval training, etc.) depends on your specific expertise, which should shine throughout your content.
In terms of the “constantly refreshing my content and inventory” headache that cell phone case and software peddlers have to deal with, health and fitness are one of the best passive income ideas 2020 has to offer because it doesn’t change. Unlike the iPhone, the human body takes a few million years to upgrade.
A great way to make your workout videos stand out is to add a functional layer onto them.
Everyone’s talking about deadlifting this and benching that, but what about getting in that little convertible without hip pain? What about combating the “computer screen neck?” Less sexy? Sure. But it will help you stand out.
Anything That You Can Make Once and Sell Over and Over
I have no intention of pigeonholing you here. I may have covered the greatest hits above, but you should get in the habit of refusing limitations. What I mean is, create whatever you want. If it’s not a tried-and-true format, like an ebook or training course, it’s okay. You just might become an innovator.
Depending on how finicky you are in terms of checking up on your investments, investing can be one of the most truly passive income streams out there. The smarter and more spread out you are, the less mid-bagel panic attacks you will have when checking the morning paper.
I know that the word “investing” can elicit thoughts of some rich and savvy fat cats, but everyday people can absolutely invest, and smartly, too. Do I really need to explain why it’s passive? You put in some money, it grows, and you eventually pull it out. That’s it! Let’s take a look.
Is there anything purer and more capitalistic than a peer-to-peer lending platform? It’s like your playground bartering system of the tender elementary school years, except, instead of candy and baseball cards, we’re talking cash. No banks, no bologna. Just people lending to people.
Of course, peer-to-peer lending platforms have rules and regulations too, but here’s the premise: you invest a set amount of money, ideally spreading it out into many micro-loans, and the recipients will pay you back with interest. That’s it. You’re just lending someone else money online.
I learned a lot about investing in real estate from my Father who took my brothers and me every Saturday he possibly could, to help maintenance his rental properties. We were the only kids in school who hated Fridays because we knew Saturday meant laboring at rental houses. But the lessons learned from those days, have served me well.
Real estate investing is worthy of not only an article or two but an entire blog of its own. For today’s purposes, just know that it’s one of the best passive income streams – although not truly passive. There are many ways to do it – flip a property, rent a property out, buy and manage a large property, and so forth.
If you really don’t feel like hiring a property management company, dealing with contractors and so on, you can even go the crowdfunding route. That’s right, the “little guy” can kick in a few hundred or thousand bucks into large commercial real estate deals. It sounds easy, but it’s not without risk.
I guess here is as good a place as any, considering the relevance of research in real estate investing. I just wanted to note that none of the passive income ideas that were seen in 2019 are worth much without market research. How many people want what you have? How much will your commodity be worth in a year?
These questions are different for every passive income stream, but you get the point. If you just get tunnel-vision on your product and your page and your content, you won’t be able to adjust to the market. Research is king!
So speaking about research, my Father never wrote a book about real estate. However, real estate master and best selling author Robert Kiyosaki explain investing real estate in his book Rich Dad Poor Dad. Mr. Kiyosaki was able to “retire” in his early forties mainly because of investing in real estate!
CDs, Index Funds, Something Else Technical…
I’m not interested in lecturing you on the finer points of CDs and index funds, because this is more of a general intro to the best passive income streams today. Just know that these well-established investment strategies offer great promise to the savvy and diversified investor.
Depending on how much risk you’re willing to take on and how much money you have to start with, you can make thousands a month or pennies. Either way, CDs and index funds are two of the most stable investments out there, so it’s a great place for newbies to start.
Pay Off Your Home
Speaking of risk here is a truly risk-free investment. If you pay off your home, then there is a 100% chance you won’t have to pay your mortgage. I know that sounds face-palming simple, but think about it. Peer-to-peer, crowdfunding, CDs, whatever – they can all still go belly-up. This can’t.
It may sound farfetched at first, but take a look at your forecast. See how you’re paying double to triple the value of your home because of interest? If you save your butt off and make large overpayments early on, you will save tens to hundreds of thousands of dollars AND lower your monthly expenditures.
Trusted financial coach Dave Ramsey is well known for a lot of things, but one of which is wonderfully explaining how to pay off your mortgage.
If you have some solid capital, to begin with, you can always invest it directly into a single business and become a silent partner. It may be more risky than a diversified portfolio, but if you can anticipate the market’s response to this business, it’s one of the best passive income streams around.
There’s nothing wrong with hopping on a fad here, so long as you time your exit before the crash. An investment in a bakery that makes tasty effigies of the current commander in chief, for example, is sure to have an expiration date.
The Content-Centered Approach
“You already talked about intellectual property, Scott!”
Yeah, I know. Let me explain what I mean by content-centered. Remember those dead authors I talked about? They sold their content for money. One book, however many dollars, the end. The entire point of writing the book was to sell it.
What I’m now referring to is creating content for the sake of creating content and then monetizing it by sponsoring advertisements after the fact. So, I don’t “sell” my blog post directly, but I still make money when people view it. Speaking of blogging…
People keep trying to groom blogging as this bubble that will eventually burst, but it never will, and here’s why: it’s an idea, not a thing. It’s like slang or humor – it can’t be killed. Fidget spinners died because they can only do one thing. Blogging will live on because it’s an entire environment in itself.
From his book Blogging For-Profits in 2019, Ronald Roberts makes a clear point that blogging is not dead and that one of the absolute key characteristics you must possess in order to be successful in blogging, is passion.
If you are passionate about a topic, then boom, learning and communicating to others about said topic is going to be your strength for having a successful blog.
But I must state this for you, my friend, blogging is not passive at the beginning. Most bloggers don’t see a penny for six months to a year, and even then, it’s not gangbusters. Keep at it, though, and you could suddenly be making five figures or even more a month!
Similar to blogging in its level of “grittiness” is YouTube. As a content creator, you can choose to monetize your videos in a number of ways, but ads are the most common. This is generally a less profitable model than affiliate links, of course, but I digress.
YouTube has its own algorithm, and formatting is very important. If you want to be successful, you’ll have to master a long, ever-shifting checklist. Say this, not that, keep it so long, do this with the thumbnail, and so forth.
Sites and Sales Funnels
Last but obviously not least are static sites and sales funnels. Sites without blogs are a minority nowadays, but it doesn’t mean they can’t be lucrative in terms of ad revenue. If you can at least add some new insights on your social media, that will help refresh your audience on new happenings.
Sales funnels can be used for list opt-ins, direct sales, affiliate sales, leads and more. As I’ve explained before, the all-important sales funnel is a series of web pages designed to get the viewer to perform one of the above actions. Theoretically, once you set one of these up and drive traffic to it, it’s passive.
And the Winner Is…
Alright, now onto the single most amazing “passive” income stream of all: affiliate marketing. Of all the passive income ideas 2020 has to offer, I still believe affiliate marketing takes the cake. Why is it so much more amazing then all the rest, you ask?
First of all, you don’t have to create the content. There is no book to write or course to create; it’s already there. Of course, you want to create content around the content, but a landing page here and a blog post there is much less labor-intensive than a 50-hour training course or a bunkbed.
Next, the investment is much smaller than traditional investing channels. For web hosting, ads and your must-have tools, you could be looking at just a hundred or two bucks a month when first starting out. Take that to an investment banker, and they’ll guffaw over their horn-rimmed glasses!
Finally, as much as I love the content-centered approach, ad revenue can’t touch affiliate commissions – no sir. An affiliate with 10,000 people in their list can make ten, twenty or fifty times more than a site owner with 10,000 visitors a month.
That being said, there’s absolutely no reason why you can’t invest in one of these passive income streams while living that affiliate life. It’s going to take a little extra hustle, but that’s how empires are built – one brick at a time.
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